The UK trade gap narrowed in January by more than expected to its smallest in more than a year, while at the same time GDP increased by 0.3 per cent.
The latest data from the Office for National Statistics (ONS) this month showed that the UK’s trade balance narrowed by around £4.3 billion in January, despite a drop in the value of exports.
This was fuelled by an 8.7 per cent month-on-month decline in imports, compared to a 1.8 per cent fall in exports, leaving the trade deficit at £19.3 billion.
What is the trade gap?
A trade deficit occurs when a country imports more than it exports. In other words, when a country buys more than it sells, it has a trade deficit.
The total trade in goods and services deficit widened by £3.5 billion to £27.6 billion in the three months to January 2023, as exports fell by more than imports.
The ONS’ monthly report showed that a fall of 4.2 per cent in exports to EU countries was partially offset by an increase in sales to non-EU countries by around 0.9 per cent while declining EU figures were driven by falling sales of fuels, chemicals and manufactured goods.
Exports to the rest of the world benefitted slightly from higher chemicals exports to the US and pharmaceutical exports to South Korea.
Trading ‘flat’
The volume of UK goods exports has been relatively flat over the last 12 months as a result of the cost-of-living pressures hitting consumer incomes globally, and the British Chamber of Commerce (BCC) forecasts that these pressures will continue to be a drag on global trade in 2023.
GDP up slightly
Meanwhile, UK GDP growth was ahead of the 0.1 per cent predicted by economists and was driven by a return of activity across the education, health and recreation sectors.
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